Central Fund of Canada (CEF.A) - Page 3
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Thread: Central Fund of Canada (CEF.A)

  1. #21
    Senior Member Dopplegangerr's Avatar
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    Do you think this is the best way to get exposure to both gold and silver? I own G.TO now and was looking to pick up PAA.TO, but this also looks interesting


  2. #22
    Senior Member Dopplegangerr's Avatar
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    Zylon, I just reread your little blurb and the end of your last post and I think that already answered my question lol, sorry

  3. #23
    Senior Member zylon's Avatar
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    The premium has nearly been wrung out of CEF
    I'll be looking to buy within the next week or two if price continues to decline.



    http://www.cefconnect.com/(X(1)S(m0b...ookieSupport=1

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  5. #24
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    I've held CEF.A since 2007. I think it's a great way to hold precious metals. There's some information in this report:
    http://www.greatponzi.com/reports/20090829-CEF.html

    Thinking off the top of my head, there's 3 main ways this differs from actually owning gold/silver:
    1. CEF owns the metals through a bank, and you're a shareholder in the fund
    2. The share price fluctuates around the NAV, so beware the premium/discount
    3. The fund incurs expenses so some of your metal "leaks away" while you hold CEF

    That report I linked goes into depth on #3. Basically you're losing 0.6% to 0.8% per year of metal content in your shares. If you think of it as an MER, that's pretty low. In fact the analysis was done a couple years ago. In the last couple years the "MER" has been even lower than that. Not a bad deal, I think.

  6. #25
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    Here's a tip regarding the premium/discount to NAV. That figure (as they post on the web site) is slightly misleading as the share price closes at 4 pm eastern, whereas the metal prices are taken from the London fix which is a totally different time. If looking at the TSX shares, you also have to consider the USD/CAD rate, and theirs is taken at noon. So you can see these times do not perfectly align... that means the premium or discount is a bit artificial, though it's generally the right ballpark.

    The only proper way to calculate the premium to NAV is to do it in real-time, during the trading day. This is pretty easy to do with a basic spreadsheet (just mimic what they've done on their NAV page).

    Before trading CEF.A, I always pull up my own spreadsheet based on Central Fund's NAV page, and update it with the real-time information as the shares trade. Then I really know what the premium/discount is.

  7. #26
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    That premium on CEF is long gone; it's been trading at a steady discount to NAV, lately of -10% or more... brutal. This sector is hated.

    I just bought some CEF.A at 13.18

    Admittedly, I'm catching a falling knife (usually dangerous). But I like the discount to NAV, and couldn't resist buying gold/silver which is so thoroughly disliked right now

  8. #27
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    Quote Originally Posted by james4beach View Post
    This sector is hated.
    I look at that as a barometer of the amount of true pessimism in the market. There's people predicting a major meltdown, but in reality most are still not running for the exits. I've had a bit of CEF.A since Apr 2013 when gold first fell pretty hard. It's been nothing but down since. I suspect precious metals will go sideways for a while, until currency inflation starts to catch up with the price. I suppose interest rate changes could trigger something, but folks have been predicting interest rate increases for a while too, and nothing has manifested.

  9. #28
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    I've held CEF.A for many, many years and it's a long-term asset I'm happy with. It supplements my physical precious metal holdings. Basically I have no concern with their fundamental holdings so for me it's a matter of buying it low. The last time I bought some was 2008 so this is my first purchase in six years.

    I am concerned that commodities/gold seems to be forecasting severe deflation ahead. If this is true, it's wildly divergent from the message coming from US GDP and the S&P 500.

  10. #29
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    Quote Originally Posted by james4beach View Post
    I've held CEF.A for many, many years and it's a long-term asset I'm happy with. It supplements my physical precious metal holdings. Basically I have no concern with their fundamental holdings so for me it's a matter of buying it low. The last time I bought some was 2008 so this is my first purchase in six years.

    I am concerned that commodities/gold seems to be forecasting severe deflation ahead. If this is true, it's wildly divergent from the message coming from US GDP and the S&P 500.
    I like Cef.a and bet that you are wise for buying now, especially with the same philosophy serving you well in 2008. I hold a permanent portfolio that is 25% in GTU.UN (a sister fund to cef that holds gold bullion). I stacked all last year with each paycheck and am averaged in around -10% nav. I would've bought cef if I wasn't so heavy in gold already , my stomach cant handle silver anymore...

    The trick in my opinion is to rebalance out of the gold and silver during mini rallies (ideally via rebalancing bands so there's no emotion) which might mean when it's up 50-100%. Those smart enough to buy and who held through the 90's and 2000's eventually made out like bandits. You only need to catch one or two major bull markets while "all in" and you're set for life.

  11. #30
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    Yes GTU.UN is good too, it's from the same company I think.

    My recent CEF.A purchase at 13.18 is looking very lucky at the moment but only time will tell. I liked that -10% discount though


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